I'm the Founder and Managing Partner of Ironfire Capital LLC, which runs a tech-focused hedge fund and angel fund. I did a Ph.D. in Management at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management. You can follow me on Twitter @ericjackson, subscribe to me on Facebook, follow me on Sina Weibo, or Circle me on Google+. My email is: dr.eric.jackson@me.com

Top Ten Reasons Why Large Companies Fail To Keep Their Best Talent

Whether it’s a high-profile tech company like Yahoo!, or a more established conglomerate like GE or Home Depot, large companies have a hard time keeping their best and brightest in house. Recently, GigaOM discussed the troubles at Yahoo! with a flat stock price, vested options for some of their best people, and the apparent free flow of VC dollars luring away some of their best people to do the start-up thing again.

Yet, Yahoo!, GE, Home Depot, and other large established companies have a tremendous advantage in retaining their top talent and don’t. I’ve seen the good and the bad things that large companies do in relation to talent management. Here’s my Top Ten list of what large companies do to lose their top talent :

1. Big Company Bureaucracy. This is probably the #1 reason we hear after the fact from disenchanted employees. However, it’s usually a reason that masks the real reason. No one likes rules that make no sense. But, when top talent is complaining along these lines, it’s usually a sign that they didn’t feel as if they had a say in these rules. They were simply told to follow along and get with the program. No voice in the process and really talented people say “check please.”

2. Failing to Find a Project for the Talent that Ignites Their Passion. Big companies have many moving parts — by definition. Therefore, they usually don’t have people going around to their best and brightest asking them if they’re enjoying their current projects or if they want to work on something new that they’re really interested in which would help the company. HR people are usually too busy keeping up with other things to get into this. The bosses are also usually tapped out on time and this becomes a “nice to have” rather than “must have” conversation. However, unless you see it as a “must have,” say adios to some of your best people. Top talent isn’t driven by money and power, but by the opportunity to be a part of something huge, that will change the world, and for which they are really passionate. Big companies usually never spend the time to figure this out with those people.

3. Poor Annual Performance Reviews. You would be amazed at how many companies do not do a very effective job at annual performance reviews. Or, if they have them, they are rushed through, with a form quickly filled out and sent off to HR, and back to real work. The impression this leaves with the employee is that my boss — and, therefore, the company — isn’t really interested in my long-term future here. If you’re talented enough, why stay? This one leads into #4….

4. No Discussion around Career Development. Here’s a secret for most bosses: most employees don’t know what they’ll be doing in 5 years. In our experience, about less than 5% of people could tell you if you asked. However, everyone wants to have a discussion with you about their future. Most bosses never engage with their employees about where they want to go in their careers — even the top talent. This represents a huge opportunity for you and your organization if you do bring it up. Our best clients have separate annual discussions with their employees — apart from their annual or bi-annual performance review meetings — to discuss succession planning or career development. If your best people know that you think there’s a path for them going forward, they’ll be more likely to hang around.

5. Shifting Whims/Strategic Priorities. I applaud companies trying to build an incubator or “brickhouse” around their talent, by giving them new exciting projects to work on. The challenge for most organizations is not setting up a strategic priority, like establishing an incubator, but sticking with it a year or two from now. Top talent hates to be “jerked around.” If you commit to a project that they will be heading up, you’ve got to give them enough opportunity to deliver what they’ve promised.

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One major reason missing: Cheapness. That favorite fruity giant “relocated” (newspeak for fired unless you want to move 1500 Miles) commissioned salespeople out of state. Then laid off many senior IT staff by “cracking down” on stats. Some had been with the company for decades, and that company had given thousands in their products in prizes because of their great performances. How things can change overnight.

It seems that companies do not treat employees correctly, especially ones who have many years of schooling and paid 10′s of thousands of dollars to get it. When you realize that many of these employees make these companies millions of dollars every year they need to treat the correctly. Unfortunately, the bureaucratic business model does not help, but training could be provided if, and I say if, the corporate culture changed. If the bosses and owners have no respect for the workers it will trickle down to them. On the other hand, if a company would just truly value employees as an asset instead of a liability it would help a lot. By changing gears so much by getting different employees because of people coming and going they lose money and probably a lot of it. Happy workers can take a company to the next level. I never could figure out why companies build a gigantic structure but denigrate what they have built on the precept that personnel cost them money. They are far more valuable than what is paid for them and they should be appreciated. Although it may be a favorite game to look down on the workers at the cocktail parties it really is something that is negative to value added and the bottom line!

Keeping top talent – any talent – in the organization depends first on clarity of communication. I agree with the contributor who called for an end to corporate-speak:

“No one with any real talent is going to sit and listen to someone talk about the enhancement of corporate infrastructure and a customer-centric focus that will adapt to the ever-changing paradigms of a global marketplace and take it seriously.”

Software can now prune such gobbledygook from corporate documents http://www.howtowriteclearly.co.uk/ but only after years of suffering the cancer of business-speak do companies look for such practical solutions. The waste of money and talent is immense. We should support plain English in business.

Another major reason from my point of view, which somehow missed out but hidden across above list is “Top Talented people looks for admiration of their work from their senior management. Its providing feel-good factor on their importance to the organization”.

Hey KPMG merry Christmas, hope you guys are happy, I am dead and will never see another Christmas again or see my daughter celebrate Christmas again, who cares though KPMG is doing great notwithstanding all the lies, deceit, threats and theft purveyed by KPMG which caused me to kill myself.

Good work KPMG and its malevolent partners like Dennis Malloy (the lying thieving Mormon bishop), Erin Collins (the malicious deceitful IRS Lawyer), Joseph Loonan (the KPMG Hangin Lawyer)…….you guys caused me to kill myself in a disgusting painful manner so you could go on lying and stealing to make millions, too bad for my daughter though, thanks to you guys, now she has nobody.

Beware if you work at KPMG or do business with KPMG, if any of all the fraud continuously perpetrated by KPMG comes to light, regardless if you had anything to do with the fraud, if convenient (or just plain advantageous) KPMG will hire a firm like Skadden Arps with lawyers who will lie and cheat on behalf of KPMG like Peter Morrison , to make any deal it can with the U.S. Government such that your loved ones will kill themselves, become drug addicts and alcoholics and suicidal every waking moment after the horrors of the U.S. Government are purveyed upon you and your family due to the lies and deceit perpetrated by KPMG (which will include ass raping, suicide and armed gunmen invading your home and threatening your family not to mention severe public humiliation).

Enough is enough, I am sick and tired of David Greenberg leaving fraudulent blog posts about me and KPMG. David Greenberg is a lying tax cheat, everyone knows it. And now this tax cheat has the audacity to name me in a wrongful death suit because his fiancé and mother of his child committed suicide, it is truly ridiculous and shows how deceitful and devious David Greenberg is. Jane, David Greenberg’s fiancé was dead the day she met him, Jane is dead because of David Greenberg and only David Greenberg, the tax cheating liar. It does not matter what we at KPMG told the IRS, Department of Justice or Jane about David Greenberg and his lying deceitful ways, Jane was dead the day she met him.

As the Department of Justice stated when prosecuting Greenberg for selling fraudulent tax shelters, anything that happened to those around him is solely the fault of Greenberg and Greenberg alone as a direct result of his tax cheating ways. Greenberg cries about the fact a swat team went to his Children’s house and threatened them with guns or that the Department of Justice threatened to indict and jail his sister when she showed the Department of Justice receipts for airline tickets proving he went to France, it is all Greenberg’s fault.

Believe me I know because my husband worked at the Justice Department and we began focusing on Greenberg’s illegal activities as far back as the summer of 2003, my husband and I had extensive discussions about Greenberg’s and his clients tax malfeasance back then (and you would not even begin to believe what he told me he knew about Greenberg).

I also know Greenberg is lying from the extensive discussions I had with Mary Tarpley of the IRS in early 2003 about the malfeasance of Greenberg and again you would not believe what Mary told me about Greenberg’s lying cheating ways. Greenberg incredibly claims that Mary and I somehow defrauded the IRS when I got her to approve a $300 million BLIPs transaction when nothing could be further from the truth. Mary Tarpley reviewed the transaction in detail and concluded it was appropriate. Further, I spent very little time convincing Mary it was appropriate, the exact opposite of what the liar Greenberg claims.

Greenberg should just go away as we all wished he would have spent the rest of his deceitful life in prison, we at KPMG are sick of his antics and lies, Jane was dead the day she met him and his lawsuit against me claiming I caused her to die with all of my alleged lies and threats, is absolutely ridiculous and untrue.

Interesting article, but have a couple of questions, using IT as an example. - A lot of of large companies promote people to middle management that are incompetent in the area they are going into. This is because they put in a position that is responsible for an area (ie hardware), and upper management just assumes they will figure it out. For example, they may know nothing about hardware but will decide to make all the decisions about ordering anyway. The smart ones talk to the people under them who know something, others just ‘don’t know that they don’t know’, and the problems begin. This goes on everywhere. - Another point was about annual reviews. Usually many people want to move up into management, to make more money – that is their vision. Everybody can’t do that, so how do you give them a vision. Usually a senior professional in IT can make as much money as a mid manager, but that may not satisfy a vision

Eric, Interesting that only 33% of executive coaching works. Where do those statistics come from? All of these points are very common employee engagement issues. I do agree that it is a two way street and always encourage employees to take some responsibility in their career success, as you do not usually get something unless you ask! But I can see how difficult that can be in a large company. Thank you for the article! Monica of ImageThat!